Greektown residential project faces foreclosure suit

(Crain's) -- A suburban bank has sued to collect nearly $17.4 million on a Greektown loft project that's been suffocated by a downtown new-home market that's becoming a perfect vacuum -- empty of buyers.

Midwest Bank & Trust Co. has filed a foreclosure suit over Odyssey Lofts, a 62-unit project at 775 W. Jackson Blvd. where just 15 units have been sold since July, when the first buyers began moving into the eight-story structure. Developer David Wallach, a principal in Chicago-based W Developments LLC, is personally named as a defendant because he guaranteed a series of loans that financed construction, according to the complaint filed last week in Cook County Circuit Court.

The exact reasons for the default are not spelled out in the complaint, but Mr. Wallach has agreed that a default has occurred, the complaint alleges.

Mr. Wallach declined to comment on the complaint, but he says he has already had extensive talks with the bank about restructuring the loan and expects those negotiations to continue despite the foreclosure filing.

"We are not looking at this as a failed project," he says. "We're continuing to stand in there and negotiate and work through this deal until the end."

An attorney with Chicago law firm Stahl Cowen Crowley Addis LLC, which represents the bank, declines to comment.